Reagan outlines plan for economic recovery, Feb. 18, 1981
On this day in 1981, newly inaugurated President Ronald Reagan outlined a plan for U.S. economic recovery before a Joint session of Congress.
After defeating Democratic President Jimmy Carter, the incumbent, Reagan inherited a sluggish economy, characterized by high inflation, high interest rates and persistent joblessness. As the 1980 presidential campaign unfolded, the inflation rate soared to 13.5 percent. During the early years of the Reagan presidency, the prime interest rate, which is set by the Federal Reserve, kept rising, reaching 21.5 percent in June 1982, as the Fed struggled to wring inflation out of the economy.
In taking office, Reagan was bolstered by the first Republican majority in the Senate in 25 years. But he still needed to deal with the Democrats; they controlled the House, a body where the president’s proposed “supply-side” economic remedies initially encountered wide skepticism.
In his 4,445-word speech to Congress, Reagan called for large cuts to taxes and federal spending. Observers described it at the time as the most comprehensive economic proposals since President Franklin D. Roosevelt announced his New Deal program in March 1933.
Reagan told the lawmakers: “Can we, who man the ship of state, deny it is somewhat out of control? Our national debt is approaching $1 trillion. A few weeks ago, I called such a figure, a trillion dollars, incomprehensible, and I’ve been trying ever since to think of a way to illustrate how big a trillion really is. And the best I could come up with is that if you had a stack of $1,000 bills in your hand only 4 inches high, you’d be a millionaire. A trillion dollars would be a stack of $1,000 bills 67 miles high.”
Today, the national debt exceeds $20.6 trillion. In comparable dollars to the $1 trillion that Reagan railed against, it is about eight times as high.
Although he received warm applause during parts of his speech — caught off guard by an ovation near its end, he quipped, “I should have arranged to quit right there” — Democrats remained unpersuaded. When the president handed House Speaker Tip O’Neill, (D-Mass.) a printed copy, O’Neill scoffed, “Mr. President, good luck,” in a way, The Boston Globe reported, “one heavyweight says it to another before the championship fight.”
But O’Neill was proved wrong: In August, Reagan signed the Economic Recovery Tax Act, which included much of his initial request, clearing the House by a bipartisan vote of 323 to 107.
Before Reagan’s 1981 address, newly elected presidents typically passed up delivering a formal State of the Union address in their first year in office. (President John F. Kennedy was an exception in 1961.) Since then, however, each subsequent president has spoken before a Joint Session of Congress shortly after assuming office, delivering what has been widely viewed as the equivalent of a State of the Union speech.
SOURCE: HISTORY.HOUSE.GOV